Corporate Social Responsibility (CSR) is a way of ensuring that organisations make strategic decisions in an ethical, sustainable and responsible way.
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5.1. Suggested reading
"Corporate Social Responsibility (CSR) is a way of ensuring that organisations make strategic decisions in an ethical, sustainable and responsible way." - University of Edinburgh
There is no single agreed definition of corporate social responsibility, but the above outlines it in a reasonably succinct manner. Generally, it means showing due interest in the concerns of stakeholders and understanding the impacts of the organisation's activities. It is not an increasingly specialised aspect of management, and has in recent years become a necessity, rather than a choice, due to:
- Legal changes that have made aspects of CSR compulsory
- Increased interest in environmental and ethical issues from consumers and employees
- A convincing business case linking CSR to improved performance
- Shareholder pressure on businesses to show that they are operating ethically and sustainably
CSR policies can help to benefit an organisation in a number of ways, including:
- Developing or enhancing relationships with consumers and supplier
- Attracting and retaining a strong and conscious workforce
- Improving the organisation's standing and reputation
- Offering numerous benefits to society and the environment
Though these benefits may not be immediately apparent, they can be measured quantitatively and qualitatively in many ways over the long-term.
No longer is CSR considered an 'optional extra' for many organisations. Instead, companies are looking to go above and beyond the legal requirements imposed upon them, and they integrate the principles of integrity and fairness into every strategic decision they make, including the development of policies for the future. By utilising extra CSR, organisations ensure that they are future-proofed, prepared for any societal or cultural shifts, or any future legislation.
To effectively operate responsibly, CSR has to be embedded into the everyday actions and systems which operate, and the entire culture of the organisation, mostly through propagation by individual leaders within the company, from top to bottom. Often, specialists are employed to devise new systems, processes and policies which operate in accordance with the organisation's CSR gains. Due to the benefits which these policies can have for wider society, these individuals are often also involved in the communication and marketing of company activities to the general public, in order to develop and maintain the organisational reputation as a sustainable and responsible employer.
CSR generally refers to three main areas of responsibility:
These are often also sometimes referred to as People, Profit and Planet. There are many important aspects which contribute to each of the three main areas. Here are but a few for each.
- Employee's working condition and rights
- Diversity and equal opportunities
- Health, safety and protection of all stakeholders
- Relationships with the local community
- Relationships with the government and government departments
- Relationships with suppliers and their employees
- Schemes and opportunities for learning and development
- Philanthropology, volunteering and relationships with charities
- Company reporting
- Corporate governance
- Transparency and disclosure of information from management
- Quality of goods and services
- Safety of products and services
- Responsible marketing
- Record keeping
- Data and information management/protection
- Avoiding bribery and corruption
- Recycling and re-using
- Waste control
- Preventing pollution (air, light, soil, ocean, etc.)
- Sustainable energy and resource consumption
- Travel efficiencies
- Positive action to improve the local environment
There are several aspects in the above lists which are covered by legislation within the UK. For example, the Companies Act (2006) requires regard from all organisations for the environment, the interests of staff, suppliers, customers and the local community.
The main business case for CSR is the impact which it can have upon the long-term performance, profit and risk-reduction of the organisation when it engages in an environmental, social and economically-responsible approach. Individuals themselves are generally, in the modern day, responsible, aspiring to do the right thing at all times. Therefore, organisations that operate in a similarly responsible way or facilitate sustainability will in the long-term benefit from the trust that stakeholders (leaders, employees, consumers, suppliers) will place in them.
Some, however, particularly at the top of an organisation, will go no further than the legal requirements of the company. 'Business is business', after all. However, this attitude and lack of CSR has led to some of the major environmental, social and economic disasters in recent times - such as the Bhopal disaster (1984), Enron's collapse (2001), the banking crisis and global recession (2008), the Deepwater Horizon oil spill (2010) and a number of newspaper hacking scandals over the past two decades. These disasters can have drastic ramifications for organisations, leaders and all their stakeholders, as well as for the outside world.
There are three major elements that should contribute to the CSR business case:
- Reputation management. The speed of communications, social media, global media coverage and the strong demand for business transparency mean that your activities can be transmitted worldwide incredibly quickly - it is, therefore, beneficial to operate responsibly and to maintain a strong reputation.
- Risk management. Organisations should always be prepared for the worst, with regular risk assessments and evaluations, business continuity and contingency plans. This is a central tenet of CSR, and is expected of a healthy, efficient business; promoting longevity.
- Stakeholder influence. Stakeholders (including consumers and employees) should always be at the forefront of considerations, as their trust can help to build a reputation as a responsible organisation. These stakeholders' interests will vary greatly, and it is expected that organisations should cater to them as best as they can.
Though CSR policies can create a general sense of awareness and understanding within an organisation, it requires much more in order to embed sustainable and responsible practices throughout. Managers and leaders, from top to bottom, must be engaged and authoritative with regards to its implementation, feeding it into everyday practices and communicating it widely among their teams. Stakeholders - both internal and external, primary and secondary - should be engaged with the development of policies from the start, through to its implementation - this will help with building high levels of trust.
CSR should be implemented from the start; recruitment and promotions can be used to sculpt a workforce who prioritise the responsibility of the organisation, with regards to environmental, social and economic activities. Individual actions, once again particularly from leaders, should very clearly show their commitment to the policies of the company.
Pro-active approaches can take many forms. For example, organisations can ensure that their supplies are only taken from responsible sources - particularly food companies - or can clearly operate with policies which value diversity amongst the workforce. Other schemes can include working with the local community or charities to create activities or jobs in the area, or by clearly investing in the education and personal development of employees. Major manufacturers, such as those in the car industry, openly advertise the increased efficiency and reduced environmental impacts of their new models.
CSR impacts significantly on the development and implementation of strategic leadership and management. Leaders need to make basic changes to ensure that priorities for CSR are set, trust in the organisation is built, and that the stated goals are reached. Managers may develop new Codes of Conduct which, when reinforced through training, strong leadership and encouraged through various performance methods, can establish a high standard of corporate behaviour.
Managers and organisations should ensure that all policies and systems that encourage CSR above and beyond the legal requirements are aligned with the overall strategic values, vision and objectives of the company as a whole. For example, any new technological developments for sustainability can be linked with future innovation or movement into new markets. Empowerment and development of employees and encouraging new workers to join can lead to a strong workforce and leadership for the future of the organisation. Therefore, CSR activities should be integrated across the organisation, and not centralised within a specific department.
López-Fernández, A. M. (2015). Corporate social responsibility and business growth: collateral effects on business and society. Hauppauge, NY: Nova Science Publishers.
Demmerling, T. (2015). Corporate social responsibility overload? Intention, abuse, misinterpretation of CSR from the companies‘ and the consumers‘ point of view. Hamburg: Anchor.
Newell, A. P. (2014). Corporate social responsibility: challenges, benefits and impact on business performance. Hauppauge, NY: Nova Science Publishers
Beal, B. D. (2014). Corporate social responsibility: definition, core issues, and recent developments. Los Angeles: SAGE Publications.
Bertelsen, B. (2012). Everything you need to know about corporate social responsibility, Beth Bertelsen. Newmarket, Ont: BrainMass.
Rangan, K., Chase, L. & Karim, S. (2015). The truth about CSR. Harvard Business Review, 93:1, pp. 40-49.